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G3 Exploration makes strategic progress as revenues fall
Coal bed methane (CBM) specialist G3 Exploration issued its annual results for the year ended 31 December on Thursday, reporting revenue of $25.7m, including revenue from discontinued downstream operations classified as assets held for sale, down from $29.1m year-on-year.
The company said its upstream producing business generated EBITDA of $15.2m, down from $19.9m, as margins remained constant.
Cash generated from its complete operating activities during the year totalled $17.5m, rising from $8.5m, while its net loss for the year widened t $24.6m from $12.1m.
That loss was 53% attributable to the discontinued downstream business, which was fully impaired and classified as held for sale, with 12% due to an increase in depreciation and 13% for the reduction in revenue, the board explained.
GCZ equity sales, operated by CNPC, were 1.37 billion cubic feet (bcf) in 2017 compared to 1.53 bcf in 2016 - a 10% decline curve in the field where no new wells were drilled in the year.
The group said its continuing revenue generating assets were held for sale in its subsidiary Green Dragon Gas until the planned spin out, by way of dividend in specie, is complete.
"The year ended with rewarding conclusions, as we finalised the long overdue agreements with our partner CNOOC, which were executed in September 2017," said founder and chairman Randeep Grewal.
"These supplementary agreements confirmed all the company's rights, title and interest across our PSC Area.
"Since the signing of the agreements, we have been working closely with our partners to rapidly advance the producing wells, focusing on monetising natural gas sales; which commenced in H2 2017."
Grewal saif G3's producing GCZ Block continued its commercial natural gas sales, while the collaborative joint operating team concluded its ODP during the period.
"The plan approved by CNPC in October 2017 commits the drilling of an additional 147 wells by year end 2019 and gross capex of US$54 million.
"The expected natural gas production following this ODP execution forecasts production at the GCZ Block to be 6 bcf per year."
Exploration assets at the GGZ Block were boosted by a successful 12 well drilling programme at the end of 2017, Grewal added, explaining that the natural gas block in partnership with PetroChina was a "focussed asset", which was expected to have reserves certified in 2018 and to commence test natural gas sales by H2 2018.
"Overall 2017 was a significant year, in which we matured the business into a position from which we can now move ahead in spinning out, by way of the dividend in specie, the company's producing assets into a Hong Kong listed vehicle.
"G3E, as a more defined exploration and appraisal vehicle, will allow us to continue to leverage our well-positioned asset base and grow value in the energy transition in China and internationally.
"Together with the board, we remain confident in the prospects of our business and I look forward to updating the market as to our strategic progress, as the year unfolds."